The economic value from operating it will generally not match the opportunity cost of not doing other things.
And those operating it will learn the cost of this the hard way when they fail to have access to the niceties of modern society that require exchanging what you've produced for something produced by others. Like, say, the computing device that you used to post your opinion.
> The economic value from operating it will generally not match the opportunity cost of not doing other things.
Trouble is finding a better opportunity. From personal experience, my small acreage and old equipment, on average, nets me half of my developer income for just a couple of weeks per year of work. That's really hard to compete with. What else are you going to do instead?
It doesn't scale in the sense that if I put in more time I won't make more money, but the nice thing about small farms is that time commitment is also small. Fantastic income relative to the time commitment, and still leaves you the ability to do other things the rest of the year.
A friend who was an agricultural banker and financial advisor, who would regularly suggest to farmer customers that they could truly be better served financially by taking all the equity out of their farms, put it into an index fund and go to work at WalMart, or better still the post office.
That is definitely true if you are farming on debt. The big time operator is happy to see no more than index fund-like returns, so he is quite content to dump everything else into interest payments. Which means you also have to in order to compete. I am less convinced by your friend if you are not trying to service debt with your labour input.
That said, you can leverage the debt. It is much harder to get someone to loan you money to invest in index funds. With the huge run-up in asset values over the past decade, I expect the farmer with a small holding 10 years ago, who then bought up everything he could with the bank's money, is now considerably further ahead than he who invested the same amount of money in index funds 10 years ago and took a job at Walmart to try and top up those investments.
But you are right that not all decisions are financial. I expect the Walmart job is far less stressful and that is worth quite a bit.
> The economic value from operating it will generally not match the opportunity cost of not doing other things.
Not everyone evaluates their life choices like an arid economist.
In particular, not everyone would regard leaving an outdoor lifestyle for sitting at a desk all day at someone's beck and call an "oppirtunity"
> And those operating it will learn the cost of this the hard way when they fail to have access to the niceties of modern society
Actually, in many places it is possible to operate a small farm without being destitute. The point is that all the "nicities" are particularly necessary, and outside of education and healthcare you can get by ok buying second hand and mending and making do.
Heck, even the homeless have mobile phones, so your example is pretty poor
And those operating it will learn the cost of this the hard way when they fail to have access to the niceties of modern society that require exchanging what you've produced for something produced by others. Like, say, the computing device that you used to post your opinion.